Population growth not necessarily linked to property market growth

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Australia’s population is growing, but this doesn’t necessarily mean a higher demand for housing, according to news.com.au reporter Michael Matusik.

The country’s population grew by 331,000 people last year, up from 254,000 two years ago and net overseas migration has more than doubled in the past year, to 71,000 over the past three months - but Matusk says the numbers can be deceiving.

“On face value, the numbers are encouraging, but the economic reality is that increasing migrant numbers will not create a significant increase in housing demand for the short term. When looking at the Australia-wide picture, two-thirds of the recent population increase is due to an increase in overseas migration.”

The majority of these migrants come from New Zealand (30,000 a year, up from 18,000 two years before); followed by China (20,000 a year, little changed); 25,000 from Europe (up 10,000 over the past 12 months alone) and 15,000 from India (up 5000 on 2010 figures).

For many migrants, circumstances will mean that they will share space, occupying every room in a house and probably renting rather than buying.

“An increase in housing demand will certainly follow on from the lift in population growth, but it might take years to eventuate and could have less economic stimulus than past multipliers would suggest. The housing industry must respond to the realities of today, if we are to see the industry working once again.”

 

  • PETER VELLA on 4/01/2013 5:52:33 AM

    All smoke and very little fire,most migrant intake figures are regarding 457 applicants most WILL RETURN so landlords are happy housing will only grow the difference between the variables on cpi less 50%.

  • Janice Mercer on 3/01/2013 11:51:57 PM

    The Aussie real estate bubble depends on China, and China is in the midst a housing bubble bigger than any in the globe, except from Australia!! By any measure The Aussie bubble's on a far larger scale and less sustainable that Chinese bubble. Just like Oz, China's investing in pointless excess infrastructure nobody needs including huge over-supply of homes. Sure, Australia might have had strong (see http://australianpropertyforum.com/blog/main/3580451 ) in the past to fill those houses, but the latest ABS data shows immigration in freefall.

    For Australia, the party's over and everyone knows it. Vendors are now taking their overpriced homes off the market and putting them up for rent because they can't sell! It was obvious asset prices couldn't keep rising forever!

    Australia has a serious debt problem that needs to be addressed. But at the moment it’s not even being acknowledged. Why not? Could it be that if we acknowledge the debt and the need to deal with it, we have to acknowledge its cause? And could it be that the cause is too unpalatable to reveal? Could it be that successive Australian governments, along with business, have been running a Ponzi scheme with our assets, our resources and our future? It's unsustainable. (see http://australianpropertyforum.com/blog/main/3541120 ) have totally collapsed. No government wants house price growth to slow but it's unavoidable now.

    Slow growth undermines the short-term share price of big business (and CEO remuneration), as well as the electoral performance of the government. So to facilitate growth, the Government turns a blind eye to the fact that a significant proportion of demand fuelling “growth” is debt driven; debt-financed demand has constituted around 20% of total demand in the Australian economy. The best way to keep growth on the up and up is to keep everyone spending and money cheap. Consumers are told that spending is the right thing to do by businesses that profit from consumer expenditure and by governments who bask in the glory of booming growth figures.

    The availability of cheap credit and consumer binges drives up prices, so more debt is needed to keep the spending going. People feel wealthier as their house prices have gone up and they have more stuff, but they don't realise that negative gearing and similar tax rorts just makes things worse. People their house will fund their retirement, so they are happy to spend more and save less. Everyone is happy – particularly business and government - so long as the spending binge continues – and money can be found to keep servicing the mountains of debt being accumulated. And therein lies the rub. How is all this debt to be financed?

  • Tony B on 3/01/2013 1:22:45 PM

    If population growth doesn't guarantee a higher demand for housing, and healthy profits for the property development and real estate markets, then where are the people going to live? There is a limit, a ceiling, to how much average workers on fixed incomes can afford to pay for a mortgage, for a roof over their heads. Obviously it means more rental accommodation, more public housing and more people crammed into shared housing and into smaller spaces. It also implies more homelessness! The great Ponzi housing scheme, propped up by our government-engineered population growth, can only erode standards of living - and collapse as Ponzi schemes do! More and more our governments are in the pockets of big businesses and the property market moguls rather than ordinary people who are being denied democratic power.

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